Webster Bank Shareholder Sells Shares

Warburg Pincus is scaling back its ownership in Waterbury-based Webster Financial Corp., but the New York-based private-equity firm still will be the banking company's largest shareholder.

The parent of Webster Bank announced late Thursday that Warburg plans to sell 10 million shares of Webster common stock, taking a profit from its $115-million investment in the bank, made in 2009. The sale will reduce the private-equity's firm ownership in Webster from 22.8 percent to 13.1 percent.

Warburg bought the common stock three years ago for $10 a share. Thursday, the shares closed at more than double, at 20.89, down 11 cents, on the New York Stock Exchange.

This morning, Webster announced the shares offered by Warburg will be priced at $20.10 a piece. The offering is expected to close Wednesday.

David A. Coulter, Warburg's managing director and former chief executive of BankAmerica Corp., will retain a seat on Webster's board of directors.

"Warburg's investment in Webster has been extraordinarily successful, so it's natural that they would lighten up and return some capital to their partners 3-1/2 years into the relationship," said James C. Smith, Webster Financial chairman and chief executive. "Warburg continues to hold a majority of their position in Webster, consistent with our shared view that Webster continues to make good progress in its quest to be the leading regional bank in its markets."

At the time of Warburg's investment, Webster said it would use the proceeds to strengthen its capital position — the bank's cushion against losses — and for taking advantage of business opportunities as the economy turned around.

Warburg couldn't be reached for comment late Thursday.

Also Thursday, Webster said it intends to repurchase 2.5 million of the shares being sold by Warburg, part of a $100-million buyback program approved by the bank's board of directors.

Warburg has a history of investing in banks during times of economic crisis. For example, it invested in Mellon Bank in 1988 during the savings and loan crisis.